Nike, Inc.

Good afternoon, everyone. Welcome to Nike Inc's Fiscal 2024 First Quarter Conference Call. For those who want to reference today's press release, you'll find it at investors.nike.com. Leading today's call is Paul Tressel, VP of Investor Relations and Strategic Finance. Now, I would like to turn the call over to Mr. Paul Tressel. Please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining us today to discuss Nike Inc's Fiscal 2024 first quarter results. Joining us on today's call will be Nike Inc. President and CEO John Donahoe and our CFO Matt Friend. Before we begin, let me remind you that participants on this call will make forward-looking statements based on current expectations, and those statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are detailed in Nike's reports filed with the SEC. In addition, participants may discuss non-GAAP financial measures and non-public financial and statistical information. Please refer to Nike's earnings press release or Nike's website, investors.nike.com, for comparable GAAP measures and quantitative reconciliations. All growth comparisons on the call today are presented on a year-over-year basis and are currency neutral unless otherwise noted. We will start with prepared remarks and then open up for questions. We would like to allow as many of you to participate as possible in our allotted time. So we would appreciate you limiting your initial question to one. Thanks for your cooperation. I'll now turn the call over to Nike Inc. President and CEO, John Donahoe. Thank you, Paul.

And hello to everyone on today's call. Nike's foundational competitive advantages are the envy of the industry. As the global athletic market leader, our scale and portfolio allow us to create an impact that only Nike can. Consumers all over the world recognize Nike is the number one champion for athletes and sport as we fuel inspiration and push the limit of human potential with the industry's most innovative products. Over the past few years, we've navigated through an unprecedented external environment. We've worked through many challenges, societal, geopolitical, global health, supply chain, and more. And during this time, Nike has grown larger and stronger. In fiscal 19, Nike's revenues were $39 billion. Today, we're over $50 billion. And what's more, our growth has outpaced the overall industry during this period. Let me offer a few examples of how we've redefined the game over the past few years. The consumer told us they wanted lifestyle product, and we delivered, growing Air Force One, AJ1, and Dunk to be the three largest footwear franchises in industry history. We continue to set the bar in key global sports like basketball and global football. Jordan is now one of the leading brands in North America with potential for so much more. We've accelerated digital capabilities that fuel engagement with our brands and deepen direct consumer connections around the world. The list could go on and on. But we have a saying here at Nike, there is no finish line, we never settle. we always measure ourselves against our full potential. Nike's always been synonymous with sport. We're at our best when we deliver breakthrough ideas by lining up innovative product with distinctive storytelling delivered through differentiated marketplace experiences. And when we do it well, we expand and grow the market. Today, as I've just mentioned, we're succeeding in many areas of our business, But we expect more of ourselves and others. For example, over the past few years, we launched new product innovations in running, but we need to drive more meaningful consumer connections among everyday runners and scale these innovations more effectively across the marketplace. Our storytelling has driven energy in many areas. But we have opportunity to cut through with more sharpness and clarity around the performance benefits and distinction of our products. And we built the best in class marketplace with unrivaled scale and reach. But we have opportunity to deliver more compelling assortments, particularly when it comes to serving our women consumers. So across our company, we are focused and mobilized to address areas where we need to raise our game, while continuing to drive competitive separation across the board. We're aligned, we're competent, and we've kicked into a new gear. One recent example, a couple of weeks ago, we had over 300 leaders from across the globe gathered here in Beaverton to immerse ourselves in our fall 24 lineup. Now our teams have been back together in person over the past 15 months. and our innovation pipeline is strong, and it was on full display. The excitement and alignment of our leadership team was clear as we continue to obsess the product and storytelling we'll be bringing to life for consumers at the Paris Olympics and into the fall. Simply put, our teams are on the offense as we compete to win in all segments. And so today, I'd like to offer three examples where Nike showed our best this quarter, where we brought together product, storytelling, and marketplace to connect with consumers and drive results. Let's start with this summer's World Cup. At Nike, as I've said before, it always starts with great product. And in football, that's led by Phantom Luna and Mercurial, our most innovative football boots. as well as our array of national team kits designed for elite female players, and last but not least, our style-driven collections that stood out so well this summer. We brought our culture of innovation to life through our storytelling as we dominated the conversation with a leading share of social voice. In particular, we were incredibly effective in reaching Gen Z women through our lens of sports style and culture. On TikTok, our priority channel for Gen Z, our engaged audience, meaning those who actively interacted with our content, was up 172%, a huge statement of Nike's ability to connect with authenticity to this important demographic. And we also extended the tournament's energy through our stores. I was in Australia this summer and got to experience our Dream Arena, the immersive retail destination we created for the World Cup by transforming our Sydney flagship store. Just the latest example of how we can amplify global sport moments at retail. The experiences inside Dream Arena included the best of Nike, jersey customization, local co-creator workshops, Nike trainer-led workouts, exclusive product launches, and more. The response to Dream Arena surpassed our expectations with some great learnings we plan to use at scale moving forward. And all this led to results. In both footwear and apparel, we beat our sell-through plans with strong double-digit growth across men's, women's, and kids in global football. In EMEA, all our key boot franchises, Mercurial, Phantom, Tiempo, And Phantom Luna saw double-digit growth in Q1, leading global football to grow double digits in the GEO. And in APLA, football also grew double digits with strong growth in kid-sized kits as we continue to inspire the next generation of fans to fall in love with the sport. And whether it was from this summer's World Cup and the Euros last summer, or the WNBA and our investment in coaching, we are committed to growing the game for women's sports. Next, let's touch on basketball, another area where you can see our end-to-end offense driving accelerated competitive advantage. In basketball, we have an unprecedented portfolio of product. Earlier this month, we announced our latest signature shoe, Devin Booker's Nike Book One. It's a shoe built for comfort and performance with clean on and off court style. The Nike book one will hit retail in December with consumer energy already building. And the Sabrina one continued its very strong sell through this quarter with both women's and men's interest high. And just a few hours ago, we launched the LeBron 21. The 21 built on the success of the 20 by keeping its low-profile design and adding premium, lightweight materials designed to connect with younger generations. And Q1 also saw the official introduction of the Kobe brand. We commemorated Kobe Day on August 24th with re-releases to very strong demand. In fact, demand so strong that we only fulfilled a fraction of it. And along with Vanessa Bryant, we also selected six schools to be honored as Mamba programs for the upcoming college basketball season with both their men's and women's teams having the opportunity to wear Kobe brand player exclusive footwear. We see huge potential with the Kobe brand both on and off the court as we continue to honor his legacy. And this quarter, We also brought the energy of basketball directly to the consumer. We hosted tournaments in cities like LA and Chicago, culminating with the Nike World Basketball Festival in New York. These events created an electric atmosphere, especially during the NBA off-season, like only Nike can. And in a quarter where Jordan footwear grew double digits, The Jordan brand demonstrated its power by bringing Zion, Luca, and Jason Tatum to Paris for K54, which is one of the world's biggest streetwear and streetball tournaments that doubles as a showcase of the culture and growing community of basketball. Now, moments like these don't just grow competitive separation for Nike and Jordan. They also are how we grow the game and we grow the broader market. Finally, I'll walk through the geography where our overall vision comes to life best, Greater China. In Q1, Greater China grew double digits for the second straight quarter, and we're taking share in the market. It's in Greater China that we offer the consumer Nike's most premium and elevated retail. The team gets the most out of our innovative product through world-class and locally relevant storytelling and strong marketplace execution. A great example is our women's business, which outpaced overall growth in the quarter. The work the team has done to serve our women's consumer in Greater China is proof of what Nike can do when all the pieces are aligned. A highlight in Q1 in Greater China was our three-day sport festival, Sportchella, where we welcomed thousands of women to connect with our three brands through movement and mindfulness. The team amplified the impact of the festival by partnering with Tmall to create the first Nike Superbrand Week, which drove more than 2 billion impressions. And this partnership seamlessly integrated the events with a digital shopping journey that generated very strong consumer response and engagement. Our Greater China team also brings our brand to life through our best retail experiences, fueled by strong and meaningful storytelling. These breakthrough retail experiences highlight our innovations and marketing in a clear package for the consumer. For example, in Q1, our seasonal presentations and curated head-to-toe style guides had very favorable consumer response. And once again, this combination of innovation, storytelling, and marketplace execution led to results. We took share in women's in Greater China this quarter with strong growth across a wide range of products, from footwear with the Motiva and Free Metcon to apparel with our statement bras and leggings. All in all, across our entire portfolio, the Greater China team has orchestrated a fully connected marketplace. They continue to transform digital commerce, launching China-specific versions of our apps, which are faster for consumers and more personalized, including a new Jordan destination to the Nike app in Q1. And they're expanding connected partnership, which after just a few quarters is now live in 350 doors across 102 cities. and is driving substantially higher member demand versus last quarter. Simply put, Greater China sets the execution standard for us. And our goal is to scale their success across all of our geographies, every sport and every dimension of our business. And that's how we win over the long term. In the end, as I've said, we're focused and moving with great confidence against the opportunities we see. Our teams feel energized, united by our shared passion and urgency for competing at the highest level. We set high expectations for ourselves at Nike. That's what winners do. And now, more than ever, we're ready to bring our very best and demonstrate what Nike's capable of. And with that, I'll turn the call over to Matt.